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Fuel Costs: Redefining Essential Deliveries

Autosphere » Fleet » Fuel Costs: Redefining Essential Deliveries
Fewer trips mean fewer miles on the vehicles, and in some cases, fleets might restructure their leases to save on monthly fixed expenses. PHOTO Shutterstock

You should work with your customers to optimize your truck trips.

Almost everything has changed due to COVID-19, including how consumers buy products. That in turn affects getting goods to your clients, and the associated costs. If you do your homework, there may be savings in redefining your essential deliveries and how you do them.

“It’s about taking a holistic view, and making sure you have all the data to make an informed decision,” said Ed Powell, manager of business intelligence and analytics for ARI. “This isn’t the time to run on gut instinct alone, because it’s a market we haven’t seen before.”

Analyze what you did before

The process starts with analyzing pre-pandemic data – how many stops each truck was making, how much fuel each truck was using, the routes they were taking, and the maintenance they required. From there, fleet managers can work with the people involved throughout the process.

“You need the fleet data and performance, but also the business intel and knowledge of how your staff operates,” Powell said. “It will be unique for every client.”

Speculation costs money

He gives the example of a beverage delivery fleet where trucks were loaded with extra drinks, “because they were hoping to get a point of sale or a new flavour picked up.

Every day, the trucks would come back with half (the load), and from the fleet side, they were wasting a huge amount of money with bigger trucks and more fuel. It comes down not just to the fleet, but to the business.”

“For most clients, the fleet is the core. It supports everything they do and how they generate revenue. They have to understand that holistic view. If the fleet manager doesn’t understand how revenue is gained, there’s a gap. Fleet is not a cost. It’s an investment in the company to generate revenue.”

Every product has built-in costs

When streamlining your deliveries, it’s important to have conversations with the customer, because someone has to cover the cost of getting products to the end-user. If each shipment’s size drops, you have to look at alternatives.

These could include larger orders at longer intervals, so the trucks make fewer trips with subsequent fuel savings. “Every product has a cost to get it on the shelf in the store,” Powell said.

“If there’s flexibility in the supply chain and a willingness to work together to lower that cost, there are more savings to pass along to the consumer.

No one will eat that expense. In a situation where you can’t restrain (costs) due to COVID, the cost has to go somewhere. What you’re charging goes up, or you get creative.”

Fewer trips mean fewer miles on the vehicles, and in some cases, fleets might restructure their leases to save on monthly fixed expenses. But the used vehicle market is volatile right now, and while lower-mileage vehicles will have better resale value, sellers must be cautious.

“If you’re disposing of assets right now, you need the right auction, the right place and the right time,” Powell said. “More than ever, you need an informed partner to navigate it when selling.”

 

Categories : Editorial, Fleet

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